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Shares dip after 'fiscal cliff' failure

The sharemarket closed lower as investors sold off stocks amid worries about US fiscal cliff negotiations.

A controversial Republican plan to let tax breaks expire on millionaires crashed to defeat Thursday when it failed to earn enough party support, leaving negotiations on averting the ‘‘fiscal cliff’’ up in the air.

At the close of trade on Friday, the benchmark S&P/ASX200 index was 10.5 points, or 0.23 per cent lower at 4,623.6, while the broader All Ordinaries index was down 11.4 points, or 0.25 per cent, at 4,635.2.

On the ASX 24, the March share price index futures contract was 17 points lower at 4,592, with 28,741 contracts traded.

Investors around the world fear the approaching fiscal cliff - tax increases and government spending cuts that take effect January 1 and could tip the world’s largest economy back into recession unless a compromise is found.

‘‘The market has put the most negative interpretation on that,’’ Mr McCarthy said.

‘‘Frankly that looks like a knee-jerk reaction to me because it only needs about 15 moderate Republicans to vote with the Democrats and a deal will be done.’’

Mining stocks suffered some of the heaviest losses, with Rio Tinto down 56 cents to $64.74, BHP Billiton shed 34 cents to $36.70 and Fortescue Metals had given up 12 cents to $4.38.

ANZ shares were 15 cents, or 0.6 per cent up, at $24.95, Commonwealth Bank was 49 cents stronger at $62.00, Westpac had added 20 cents to $26.17 and National Australia Bank was six cents higher a $24.94.

In local news, Billabong shares had sunk to near all-time lows after chief financial officer Craig White left the troubled surfwear retailer late Thursday.

It came less than a day after the company began considering its lowest takeover offer in 10 months.

But by the close on Friday, Billabong shares had regained some ground, up 2.5 cents at 82.5 cents.